In 2009, company officials will not take home as much as they have in other years, but not because of any cuts agreed to by management. In fact, if truth be told, the Magna gang will get more than can be justified by the Magna constitution, which has been used so well to justify past compensation levels.

As I noted in my blog yesterday, the global auto-parts company has long justified its huge executive paycheques, not to mention the mountain of cash it hands out to part-time chairman and controlling shareholder Frank Stronach, by noting executive compensation is tied to a fixed percentage of pretax profits by the so-called Magna Carta. Nobody has cut that percentage. What has happened is that Magna’s pre-tax profits have been hit hard by economic turmoil and exposure to the fate of Detroit’s Big Three.

During tough times, Magna executives are supposed to live off their salaries, which are still a significant six figures. The salaries have not been cut, either. Instead, the company is topping them up because performance pay has tanked with profits and Magna now insists that its officials, including Stronach’s daughter Belinda, should not be forced to live up to the spirit of the constitution.

Stronach loves to boast about being different. He has repeatedly insisted that the big payouts only happen at Magna when there are plenty of pre-tax earnings to distribute to executives, workers, investors and society. But under the direction of lead director Mike Harris, who took home more than $600,000 last year for being a self-proclaimed slave to the Magna constitution, the rules have been changed to ensure Magna executives don’t have to survive on less than seven figures. That’s despite all the money they accepted under constitutional rules in the past.

Stronach himself isn’t getting a top-up, which he would not deserve. After all, he has always told me that his real role at Magna is to make sure that the executives and directors he put in place live by the constitution that justifies his dual-share powers and multi-million-dollar consulting fees.

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DOUBLE TAKE: Aside from trying to promote myself while generating Web traffic that helps put bread and butter on my table, this blog aims to stir debate by taking a harder look at current news and events. I obviously enjoy voicing my own opinions, but I am a big boy and I welcome all comments that don’t require R ratings. So let me have it via this blog or send me an email at tom.watson@canadianbusiness.rogers.com. I reserve the right to post email comments without disclosing the sender’s name. If you don’t think I am a total twit, follow my DOUBLE TAKE posts via my NotSOCRATES Twitter site at http://twitter.com/NotSocrates

THOMAS WATSON is a Senior Writer and editorial board member at Canadian Business magazine. Since winning a community journalism award as a cub reporter with the Hamilton Spectator in the early ’90s, he has covered business, finance, politics and technology for various news outlets. Prior to joining CB in 2001, he reported on the steel and automotive sectors for the Financial Post. Watson received his first magazine award nomination for exposing a stock manipulation plot aimed at Waterloo, Ont.-based Open Text in 2000, when he was head of investor relations for an international venture capital outfit in the City of London. Watson holds graduate degrees in journalism, international relations and public finance and undergraduate degrees in history and politics.

That missed my point, which is that the bonus money in question was negotiated before the crash and should not be taxed back by politicians (especially ones simply out to pander to mob mentality). I didn’t argue anyone should feel good about the AIG payouts. I said legal contracts should be respected.

For the record, I think the company should have been put into bankruptcy. And while it is on public life support, I don’t think new contracts at the U.S. giant should be anything close to what was OK during the good ol’ days. Then again, as far as I can tell, AIG employees are not bold enough to publicly demand that no real sacrifices are made as the company moves forward. And that’s why I think the attitude at the Canadian Auto Workers union is actually worse than that at AIG.

You can read Ken Lewenza’s take on the matter in the current print issue of Canadian Business magazine, which also has an editorial that points out the ridiculous nature of maintaining CAW perks. In this blog, I’ll just note that a lot of taxpayers in this country see unionized autoworkers as the guys and gals with the pay and benefits to beat, and not just amongst the blue-collar crowd.

I have a lot of respect for unions, but I am no leftie. I respect some hedge fund managers, too. Let’s just say, I am right-handed, but my mind is wide open. Anyway, in this case, my argument is not political.

I have no problem with anyone taking what was negotiated with any corporation as a going concern. But the not-so-big-anymore Big Three are broke and the CAW still insists its members deserve perks and pensions that most Canadians can only dream about. And that includes workers who do exactly the same job at Toyota and Honda.

The latter automotive plants are not asking for handouts. But they are just as Canadian as any operations run by the Detroit trio. The jobs they create go to citizens who work just as hard as any CAW member—for less. These folks, of course, are being asked to support bailouts that put their jobs at risk by keeping overcapacity in the system.

You could argue that supporting the Big Three is required for the greater good in this economic climate. Still, tax dollars are being demanded by workers who think they deserve more than less demanding people on the hook for the bailout bill, which is why I think CAW members should think twice before blasting anyone at AIG.
DOUBLE TAKE: Aside from trying to promote myself while generating Web traffic that helps put bread and butter on my table, this blog aims to stir debate by taking a harder look at current news and events. I obviously enjoy voicing my own opinions, but I am a big boy and I welcome all comments that don’t require R ratings. So let me have it via this blog or send me an email at tom.watson@canadianbusiness.rogers.com. I reserve the right to post email comments without disclosing the sender’s name.

THOMAS WATSON is a Senior Writer and editorial board member at Canadian Business magazine. Since winning a community journalism award as a cub reporter with the Hamilton Spectator in the early ’90s, he has covered business, finance, politics and technology for various news outlets. Prior to joining CB in 2001, he reported on the steel and automotive sectors for the Financial Post. Watson received his first magazine award nomination for exposing a stock manipulation plot aimed at Waterloo, Ont.-based Open Text in 2000, when he was head of investor relations for an international venture capital outfit in the City of London. Watson holds graduate degrees in journalism, international relations and public finance and undergraduate degrees in history and politics.

We decided to check out the CFOs of Canada’s largest public companies and came up with some interesting numbers. The median compensation for the 60 CFOs for the latest fiscal year was $2,236,100 — or about 25 times the median CA level. With the values of options exercised removed, the median came in at $1,487,950.

The annual compensation ranged from over $10,000,000 for Wayne Brownlee of Potash Corp. to $408,300 for Mark Gow of Fording Canadian Coal Trust. A total of 47 CFOs made more than $1,000,000 last year. Considering that the average Canadian tax filer pulled in about $39,900, accounting is certainly a profitable profession.

Did the 41% increase in total CEO compensation translate into a comparable rise in shareholder return. In a word, NO. The average total shareholder return in 2007 for the companies involved was 13.2% meaning the CEOs got 27.8% more in compensation than shareholders got in return. Below is a table showing the 60 CEOs, the companies, total 2007 compensation, percent change from 2006, total shareholder return in 2007 and the difference between the increase in individual CEO compensation and the company’s total return. In the difference column positive numbers indicate the CEO’s increase was more than the shareholder return and negative numbers mean the CEO’s increase was less.

Compensation